Originations

Eight tranches from five deals originated with collateral from Option One Mortgage Corp. in 2003 have been placed under review for possible downgrade by Moody's Investors Service.The affected classes from Option One Mortgage Loan Trust are as follows: series 2003-3, classes M-5 and M-6; series 2003-4, class M-6; series 2003-5, classes M-5 and M-6; and series 2003-6, class M-6. The affected classes from ABFC 2003-OPT1 Trust were classes M-5 and M-6 of series 2003-OPT1. In addition, Moody's has placed two tranches from one Option One deal under review for possible upgrade. The negative rating actions were attributed to credit enhancement levels that may be low given the projected losses on the underlying pools. The transactions consist primarily of first-lien, adjustable- and fixed-rate subprime mortgage loans.

Three classes of LB-UBS Commercial Mortgage Trust 2001-C2 commercial mortgage pass-through certificates, series 2001-C2, have been downgraded by Moody's Investors Service.The downgrades were as follows: class M, from B2 to B3; class N, from B3 to Ca; and class P, from Caa2 to C. In addition, Moody's upgraded five other classes and affirmed the ratings on eight classes in the transaction. The downgrades were attributed to realized and projected losses from liquidated and specially serviced loans. The certificates are collateralized by 133 mortgage loans on properties located in 23 states, and the pool includes a shadow-rated component, representing 14.7% of the pool, and a conduit component, representing 50.6%, Moody's said. The rating agency can be found online at http://www.moodys.com.

Quadra Realty Trust Inc., a New York-based real estate investment trust, has priced an initial public offering of 16.67 million shares of common stock at $15 per share.Quadra said it invests in a diversified portfolio of commercial mortgage investments and related projects, including construction, mezzanine, and bridge loans, and fixed- and floating-rate whole loans, among others. The company has granted the underwriters an option to buy up to 2.5 million additional shares to cover any overallotments. The joint book-running managers for the IPO were Credit Suisse Securities (USA) LLC and Wachovia Capital Markets LLC. Quadra said its shares will trade on the New York Stock Exchange under the symbol QRR. The REIT can be found online at http://www.quadrarealty.com.

Health Care Property Investors, Long Beach, Calif., has made an offer to acquire Sunrise Senior Living Real Estate Investment Trust for $18 (Canadian) per share.This represents a 20% premium over a $15 (Canadian) offer from Ventas Inc., a Louisville, Ky.-based REIT, HCPI said. Responding to the offer, Sunrise, a Toronto-based REIT, said it cannot consider the offer until HCPI confirms that its proposal "is not conditional on it reaching an agreement with Sunrise Senior Living," the manager of Sunrise REIT. The current offer from Ventas remains in effect until the HCPI proposal proceeds further. The companies can be found online at http://www.hcpi.com, http://www.sunriseseniorliving.com, and http://www.ventasreit.com.

Silverado Financial, Beverly Hills, Calif., has signed a letter of intent to acquire Fidelity Capitol Financing Inc., a mortgage lender based in El Dorado Hills, Calif.The terms of the proposed deal were not disclosed. Silverado said the acquisition would be in keeping with its previously announced plan to restart mortgage operations. "Fidelity Capitol is an Equal Housing Lender, and management believes that it will be able to form the core of a newly invigorated financial services and real estate development company," Silverado said. The company said it also plans to acquire "other candidates in the mortgage service space." Silverado can be found on the Web at http://www.silveradofinancial.com, and Fidelity Capitol can be found at http://www.eldoradohillsloans.com.

The principles outlined in the federal government's nontraditional mortgage guidance should apply to subprime hybrid ARMs, says Federal Reserve Board Chairman Ben Bernanke, and the new guidance will be issued "fairly soon."The Fed chairman told the House Financial Services Committee that lenders should use "good underwriting" in making subprime adjustable-rate mortgages. However, regulators are still working on the guidance and have not determined whether 2/28 ARMs should be underwritten to the fully indexed rate, he said. The guidance issued in September requires lenders to qualify borrowers of interest-only and payment-option ARMs at the fully indexed rate. They can no longer underwrite based on the teaser rate.

Early payment defaults on subprime residential loans are accelerating, and creditors are being highly critical of whom they do business with, a top Merrill Lynch analyst told investors Feb. 14.Merrill's Kenneth Bruce also said lenders are under intense pressure to tighten their underwriting guidelines, which could lead to a credit crunch for subprime borrowers. During the same conference call, Merrill researcher Kamal Abdullah raised the specter of a subprime "contagion" that could lead to the inability of the "bottom" 25% of all subprime borrowers to get loans. MortgageWire broke the news Feb. 9 that Merrill is making margin calls on nondepository subprime firms that it has been financing. The investment banking firm, like other Street firms, has been forcing lenders to buy back bad loans. Several undercapitalized wholesalers that cannot meet Merrill's demands -- and the demands of other secondary-market loan buyers -- have been forced into bankruptcy, including OwnIt Mortgage and ResMae of California and Mortgage Lenders Network of Connecticut. (For more details, see the Feb. 19 issue of National Mortgage News.)

Tribeca Lending has agreed to purchase the wholesale arm of New York Mortgage Trust, a mortgage real estate investment trust, in an asset deal valued at $485,000.Tribeca, a subsidiary of Franklin Credit Management Corp., will offer jobs to 60 sales and processing staffers housed in NYMT's Bridgewater, N.J. office. Richard Payne, who is in charge of NYMT's wholesale business (which operates under the name New York Mortgage Co.), will become the new president of Tribeca. Tribeca also will assume the existing pipeline of alternative-A loans from NYMT. "Tribeca will pay [New York Mortgage Co.] 50 basis points for each loan in the acquired pipeline that is subsequently closed by Tribeca, an amount that is estimated to total $150,000 to $200,000," Franklin Credit said in a statement. Tribeca will not purchase any closed loans or other assets from New York Mortgage Co., or assume any liabilities other than the Bridgewater lease. Last week IndyMac Bancorp, Pasadena, Calif., agreed to purchase the 32-branch retail platform of NYMT for $13.4 million.

Washington Mutual, Seattle, has cut 100 staffers in its Stockton, Calif., office, including 50 who worked for its subprime division, Long Beach Mortgage.The news was first reported by the Stockton Record. As of MortgageWire's deadline, WaMu officials had not returned telephone calls about the matter. One secondary-market official told MW that the thrift recently came to market with a $240 million package of delinquent mortgages. The status of the sale is not known. WaMu, through Long Beach, is the nation's ninth-largest subprime funder, according to the Quarterly Data Report. WaMu can be found on the Web at http://www.wamu.com.

Silver State Mortgage, Henderson, Nev., late Wednesday closed its wholesale division, which funded $1.1 billion loans in the fourth quarter, a 52% increase from the volume in the same quarter last year.The wholesale unit is based in California, a state whose mortgage community has been hammered by the current meltdown in the subprime market. As of MortgageWire's deadline, the company had not returned telephone calls about the matter. Silver State is a nondepository that funded home loans in several states, including the once red-hot Nevada real estate market. According to the Quarterly Data Report, it ranked 36th among wholesalers in the third quarter. It also operates a retail division whose fate is unknown at this time. The company can be found online at http://www.homeloanslasvegas.com.

Class M-3 of RFSC Series 2003-RP1 Trust has been downgraded from B3 to Caa3 by Moody's Investors Service, and classes M-3 and M-4 of RFSC Series 2004-RP1 Trust have been placed on review for possible downgrade.The downgrade was attributed to continued losses that have led to "significant deterioration" in overcollateralization. The other two tranches were placed on review based on the weaker-than-expected performance of the underlying pool of subprime and re-performing residential mortgage loans, the rating agency reported.

The senior unsecured debt of EOP Operating LP and Spieker Properties LP, affiliates of Equity Office Properties Trust, have been downgraded from Baa2 to Ba3 by Moody's Investors Service in the wake of the acquisition of Equity Office by The Blackstone Group.In addition, the preferred stock rating of the Chicago-based Equity Office was downgraded from Baa3 to B2. Moody's said it will withdraw all the REIT's ratings. The debt downgrade "reflects the more aggressive capital strategy that will be employed by The Blackstone Group," the rating agency said. "Leverage is expected to rise to almost 80% of total assets, most of which is expected to be secured." Moody's said the ratings of Equity Office and its affiliates are being withdrawn because it does not expect adequate information to be available to continue monitoring them. Moody's can be found online at http://www.moodys.com.

Hospitality Properties Trust, Newton, Mass., has priced a follow-on public offering of 5.0 million common shares of beneficial interest at $47.67 per share.The company, a real estate investment trust that specializes in hotels, said it expects to use the net proceeds of the offering to repay a portion of the debt incurred to fund its recently completed acquisition of TravelCenters of America. The underwriters have been granted an option to buy up to 750,000 additional shares of common stock from the company to cover any overallotments. Merrill Lynch & Co., Morgan Stanley, and RBC Capital Markets are the joint book-running managers of the offering. Hospitality Properties can be found on the Internet at http://www.hptreit.com.

Accredited Home Lenders Holding Co., San Diego, has reported a loss of $37.8 million ($1.49 per share) for the fourth quarter, down 187% from net income of $43.3 million ($1.96 per share) a year earlier.For the full year, the company had net income of $57.7 million ($2.48 per share), down 63% from $155.4 million ($7.07 per share) in 2005. "Results for the fourth quarter were dissatisfying; however, during the quarter we absorbed the bulk of the impact of the Aames merger and continued responding to the current difficult credit environment," said James Konrath, Accredited's chairman and chief executive. "We spent much of the quarter completing the integration of Aames' retail business and continued to implement changes to our underwriting guidelines, both of which negatively affected key profitability drivers such as volume, costs and premiums." Accredited added $42 million to its reserve balances during the fourth quarter because of increasing delinquencies and repurchase activity. Accredited's stock closed at $25.22 on Feb. 13. After initially punishing the stock the next morning by driving it down to $22.90, investors reversed course, bringing the price up to $26.69. It was trading at $26.09 around midday Feb. 14, up $0.87 on the day. Accredited can be found online at http://www.accredhome.com.

Community banks cut back on their sales of newly originated single-family loans to wholesalers and secondary-market agencies last year, and sales to Fannie Mae dropped the most, according to a survey by America's Community Bankers.The 215 institutions responding to ACB's annual Real Estate Survey sold only 24% of their loan production in 2006, down from 34% in 2005. Conduits and wholesalers purchased 40% of the $1.95 billion loans sold in the secondary market and Fannie and Freddie Mac purchased 41%. Freddie's share increased by five percentage points to 26%, and Fannie's share fell five percentage points to 15%. The survey respondents originated $20.5 billion in residential mortgages in the first nine months of 2006, and 39% expect to see an increase in loan production in 2007, while 27% expect to see a decline. The respondents are "not as optimistic as they were last year," said ACB senior vice president Debra Cope. ".... The only business where a majority saw a prospect for an increase was home equity lending." A large majority said they expect to see a decline in construction and multifamily lending.

The Market Composite Index, an overall measure of mortgage applications, rose from 630.1 to 639.8 on a seasonally adjusted basis during the week ended Feb. 9, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 4.5% on the week and were up 10.9% from the level recorded a year earlier. The Purchase Index fell from 404.7 to 400.7 on a seasonally adjusted basis, while the Refinance Index rose from 1943.4 to 2031.7. Refinancings represented 46.1% of total applications, unchanged from the previous week, while adjustable-rate mortgages accounted for 21.2%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.23% to 6.24%, and points (including the origination fee) fell from 1.09 to 1.06 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Federal Reserve Board Chairman Ben Bernanke says there are "tentative" signs that the housing market is beginning to stabilize, but that it is too early to tell whether the downturn is over.He noted that the "ultimate extent of the housing market correction is difficult to forecast" because of large inventories of unsold homes and trends in house prices. "It is early to say this problem is over," the Fed chairman told the Senate Banking Committee, and he said he wants to wait until the spring selling season to gauge the demand for housing. In response to a question, the Fed chairman said distress in the subprime market is a concern. "I am following it very carefully," Mr. Bernanke said.

Federal banking regulators are still working on guidance involving subprime 2/28 ARMs and they are not ready to issue anything yet, according to a letter the regulators are preparing to send to Senate Banking Committee Chairman Christopher J. Dodd, D-Conn."We are committed to issuing clarifying guidance for these types of products," the letter says. The letter indicates that the regulators are concerned about prepayment penalties and the practice of underwriting to the teaser rate. And they are considering an update of the existing subprime lending guidance and other approaches to address these practices. In December, Sen. Dodd and five other senators urged the regulators to extend the nontraditional mortgage guidance to subprime hybrid adjustable-rate mortgages. Sen. Dodd called the response a "little inadequate" during a committee hearing on monetary policy. "The notion 'We're thinking about it' was nice to know," Sen. Dodd said. "But I think many of us would like to know they're taking some additional steps." He asked Federal Reserve Board Chairman Ben Bernanke to respond in writing.

Fremont Investment & Loan, the nation's fifth-largest subprime wholesaler, told loan brokers Tuesday that it will no longer fund second mortgages.In an e-mail message provided to MortgageWire, Fremont predicted that its competitors will make "similar changes in the next few weeks." Seconds are used in popular "80/20" combo loan programs and "piggyback" arrangements used to avoid private mortgage insurance. The e-mail message says, "Due to general negative Industry sentiment, due to recent articles in the media, and the ripple effect in the secondary market," Fremont is making changes to its loan menu, including the immediate elimination of second mortgages. In the message, the company warns brokers that have 80/20 "combo" loan "prequals" with Fremont that they will need to contact the wholesaler to obtain new pricing. Based in Santa Monica, Calif., Fremont is a publicly traded nondepository.

TMSF Holdings, Los Angeles, has agreed to buy certain wholesale assets of Central Pacific Mortgage, Folsom, Calif., which is table funding about $180 million a month.No purchase price was disclosed. TMSF, the parent of The Mortgage Store, will purchase six wholesale branches, with locations in San Diego; Walnut Creek, Calif.; Phoenix; and two in Oregon. About 80 CPM staffers will join the acquiring company. Roughly 55% of CPM's wholesale fundings are alternative-A, with conforming and other products making up the balance. A retail/wholesale lender, Central Pacific Mortgage was founded in 1977. TMSF said it will create a new division, CPM Mortgage Services, to house its new unit. "TMSF will not assume any pre-closing loan repurchase obligations of CPM-Wholesale," TMSF said in a statement. The companies can be found online at http://www.tmsfholdings.com and http://www.centralpacificmortgage.com.