Originations

Five classes of the Long Beach Mortgage Loan Trust series 2002-1 subprime mortgage deal have been downgraded by Fitch Ratings.The downgrades were as follows: group 1, class I-M2, from BBB to BB, and class I-M3, from CCC/DR2 to C/DR4; and group 2, class II-M1, from A-plus to BBB-plus, class II-M2, from BBB to BB, and class II-M3, from CCC/DR2 to C/DR4. In addition, the rating on one class in group 1 was affirmed. The downgrades stem from the fact that the transaction is experiencing monthly losses that exceed the available excess spread, causing "substantial deterioration" of the overcollateralization, the rating agency said. The performance of the deal has also been hurt by a growing concentration of loans secured by manufactured homes, Fitch said. Fitch can be found online at http://www.fitchratings.com.

Eight classes from five Ameriquest Mortgage Securities Inc. securitizations have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2003-1, class M-4, from Baa3 to B1; series 2003-2, class M-3, from Baa2 to Baa3, and class M-4, from Baa3 to Ba3; series 2003-7, class M-5, from Baa3 to Ba1; series 2003-8, class M-5, from Baa2 to Baa3, class MV-6, from Baa3 to Ba3, and class MF-6, from Baa3 to Ba3; and Quest Trust 2003-X4, class M-3, from Baa3 to Ba3. In addition, class M-4 of series 2003-AR2 was placed under review for possible downgrade, and nine classes from four Ameriquest deals were upgraded. The negative rating actions were based on projected losses versus available support from excess spread and overcollateralization, Moody's said. The rating agency can be found online at http://www.moodys.com.

Equity Residential, a Chicago-based real estate investment trust, has reported the issuance of $650 million in aggregate principal amount of exchangeable senior notes due 2026.The notes, which bear a coupon of 3.85%, were offered through a subsidiary, ERP Operating LP, and will be senior unsecured obligations of ERP. Equity Residential said the underwriters were granted an option to buy up to $50 million in additional notes to cover any overallotments. Merrill Lynch & Co. acted as the book-running manager for the offering. Equity Residential, an apartment REIT, can be found online at http://www.equityresidential.com.

Accredited Home Lenders Holding Co., San Diego, has reported an increase in the size of its asset-backed commercial paper conduit from $1.0 billion to $2.5 billion.The company said the conduit is issued through its subsidiary Carmel Mounting Funding Trust, a special-purpose, bankruptcy-remote entity formed by Accredited Home Lenders Inc., a wholly owned subsidiary of the parent company. The conduit finances subprime mortgage loans originated by Accredited Home Lenders Inc. through the issuance of extendible asset-backed commercial paper and subordinated debt. "Increasing the size of this facility provides us with additional origination funding capacity at more favorable rates than traditional warehouse lines," said James Konrath, Accredited's chairman and chief executive officer. The company can be found online at http://www.accredhome.com.

Teledraft Inc., an electronic payment processing company based in Tempe, Ariz., has acquired a stake in the privately held Pacific Coast Mortgage Inc., Scottsdale, Ariz., for an undisclosed amount.Teledraft said the move is one of several aimed at shifting its core business into the financial services market. "Their business model and ours are complementary," said Teledraft president Al Slaten. "The goal is for us to learn more about the mortgage business model, how it works, and where it works." The companies can be found online at http://www.teledraft.com and http://www.pcmaz.com.

The average 30-year fixed mortgage rate fell from 6.52% to 6.48% over the seven-day period ended Aug. 24, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 6.20% to 6.18%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.18% to 6.14%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.65% to 5.60%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages, 0.5 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "The Fed has acknowledged that it is closely monitoring the housing market as it slows down from last year's record pace," said Frank Nothaft, Freddie Mac's chief economist. "Although this fuels arguments about whether we will experience a soft landing or a bursting housing bubble, market watchers also perceive that it is possible that the Fed may stop raising short-term rates over the near term. This perception takes upward pressure off mortgage rates." A year ago, the average 30-year and 15-year fixed rates were 5.77% and 5.35%, respectively, and the average hybrid and one-year ARM rates were 5.30% and 4.56%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Sales of new homes fell 4% in July from their level in June and a whopping 21.6% compared with sales in the same month of last year, adding to the gloom of the U.S. housing market.According to government figures released Aug. 24, new single-family homes sold at an annual rate of 1.07 million units in July, the lowest reading since February. The National Association of Realtors reported Aug. 23 that sales of existing single-family homes fell 5% in July to 6.33 million units, the lowest level since January 2004. According to the NAR, there is a 7.3-month supply of homes on the market (3.86 million units), a 59% increase from that of a year ago. A research report put out by RBS Greenwich Capital comments that new-home sales were "slightly weaker" than expected, adding that, "With doom and gloom coming from originators and home builders, we have to take this seriously." The NAR can be found online at http://www.realtor.org.

Seven classes of Credit Suisse First Boston Mortgage Securities Corp. commercial mortgage pass-through certificates, series 2005-CND2, have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are classes G, H, J, K, L, M, and N. The rating actions were attributed to weakening market conditions for residential condominium conversions in South Florida and performance problems involving the Prestige Portfolio loan (9.5% of the pool), the Mizner Court at Broken Sound loan (3.4%), and the Monterra at Bonita Springs loan (1.9%). The pool contains seven loans (approximately 33.2% of the pool) that are secured by condominium conversion projects in South Florida, Moody's said.

The ratings of Glenborough Realty Trust Inc., a real estate investment trust based in San Mateo, Calif., have been placed on review for possible downgrade by Moody's Investors Service following the office REIT's announcement that it has agreed to be acquired by Morgan Stanley Real Estate for $1.9 billion.Affected are the ratings of Glenborough's preferred stock, at Ba3, and its preferred stock shelf, at (P)Ba3, as well as the ratings of Glenborough Properties LP's unsecured debt shelf, at (P)Ba1, and its subordinate debt shelf, at (P)Ba2. The purchase price of the acquisition includes repayment or assumption of Glenborough's existing debt and redemption of its series A convertible preferred stock. "If the preferred stock is entirely redeemed at closing as planned, Moody's would anticipate confirming and withdrawing the ratings," the rating agency said. "Should the transaction not proceed as expected, Moody's would evaluate any subsequent strategic actions by Glenborough Realty to realize value from its office property portfolio, such as asset sales or changes in capital structure, before finalizing the review." Moody's can be found online at http://www.moodys.com.

Hospitality Properties Trust and HRPT Properties Trust, two affiliated real estate investment trusts based in Newton, Mass., have announced amendments to their $750 million revolving bank credit facilities.The interest rates on the facilities were both reduced to 55 basis points over the London interbank offered rate, and certain covenants were amended to "reflect current market conditions," the REITs reported. Hospitality Properties extended the maturity of its facility to Oct. 24, 2010, and HRPT Properties extended its facility to Aug. 22, 2010. Both feature a one-year extension option. Wachovia Securities and RBS Securities acted as joint lead arrangers for the amendment of the Hospitality Properties facility, while Wachovia acted alone as lead arranger for the amendment of the HRPT facility. The REITs can be found online at http://www.hptreit.com and http://www.hrpreit.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 561.2 to 561.5 on a seasonally adjusted basis during the week ended Aug. 18, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 1.2% on the week and were down 25.1% from the level recorded a year earlier. The Purchase Index fell from 385.9 to 382.2 on a seasonally adjusted basis, while the Refinance Index climbed from 1587.5 to 1608.5. Refinancings represented 40.6% of total applications, up from 39.6% the previous week, while adjustable-rate mortgages accounted for 26.4%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased from 6.54% to 6.38%, and points (including the origination fee) were unchanged, at 0.98, for loans with 80% loan-to-value ratios, the association reported.

Thornburg Mortgage Inc., Santa Fe, N.M., has reported the acquisition of Adfitech Inc., an Edmond, Okla.-based provider of quality-control and other services to the mortgage industry.The terms of the transaction were not disclosed. Thornburg, a residential lender focused mainly on jumbo adjustable-rate mortgages, said Adfitech is the largest provider of outsourced quality-control services to the mortgage industry and also provides post-closing audit and document delivery services. "This acquisition supports our long-term goal to build a successful mortgage lending operation by expanding our operational capabilities to include an in-house capability that will support many of our back-office lending operations," said Larry Goldstone, Thornburg's president and chief operating officer. Adfitech will become a wholly owned subsidiary of Thornburg Mortgage Home Loans Inc., Thornburg's mortgage origination and acquisition subsidiary. The parent company, a real estate investment trust, can be found online at http://www.thornburgmortgage.com, and Adfitech can be found at http://www.adfitech.com.

Sales of existing single-family homes fell 5% in July to the lowest level since January 2004, while sales of condominiums and cooperatives rose 2.8%, according to the National Association of Realtors.The NAR reported that total sales of single-family homes, condos, and co-ops fell 4.1% from a seasonally adjusted annual rate of 6.60 million in June to 6.33 million in July. Inventories of existing homes rose to a 7.3-month supply -- the highest since April 1993. NAR chief economist David Lereah said he believes sellers have to lower their prices to attract buyers, which means house prices are likely to decline over the next few months. "As a result, there could be some lift in home sales, but it'll likely take some months for price appreciation to rise," Mr. Lereah said. He also noted that the recent quarter-point drop in the 30-year mortgage rate could stimulate sales. The NAR economist attributes the pickup in condo sales to more aggressive pricing. Annual price appreciation on condos was down 1% in July, while prices of single-family homes are up 1.5% since July 2005. Sales of single-family homes have declined 11.4% since last July, when house prices were rising at a 14.6% annual rate.

Citing the blurred distinction between prime and subprime lending as well as the large overlap in their memberships, the boards of the Mortgage Bankers Association and the National Home Equity Mortgage Association have agreed to merge.Under the pact, the MBA will form a new Nonprime Council, the leadership of which will be made up initially of current NHEMA officers and members of its executive committee. NHEMA's full membership must still vote on the merger, but chairman Richard Kile "emphatically" recommended approval at a special meeting to be held in Washington Sept. 15. The MBA board's unanimous vote constitutes that group's final stamp of approval. MBA chairwoman Regina Lowrie called the merger "a natural progression that will help strengthen the mortgage industry as a whole. Together, we can be one strong voice." Commenting that NHEMA, which was founded as the National Second Mortgage Association in 1974, has served "an invaluable role" in promoting the nonprime sector, Mr. Kile said the organization "will leave the association world with a true sense of accomplishment." NHEMA has some 250-member companies, about half of which are also members of the larger, 3,000-member-company MBA. "I am confident that together, NHEMA and MBA will continue to provide the mantle of industry leadership that our membership has grown to expect," Mr. Kile said in a letter to his members. The associations can be found online at http://www.mortgagebankers.org and http://www.nhema.org.

Americans earning at least $75,000 are buying more houses than their parents at a comparable age, according to a new study commissioned by Coldwell Banker Real Estate Corp.The Coldwell Banker 2006 Homeownership in America Study found that 66% of survey respondents aged 61 or older have owned two to five homes, while 66% of baby boomers, aged 42 to 60, have already owned a similar number. Younger generations are showing homebuying habits similar to those of the baby boomers, Coldwell Banker said, with 48% of those in generation X (aged 32-41) and 36% of the so-called echo boomers (aged 31 or younger) already falling in the two-to-five-home category. The survey was conducted online by Harris Interactive.

The Mills Corp., a real estate investment trust based in Chevy Chase, Md., has announced an arrangement with Colony Capital Acquisitions and Kan Am USA Management to develop a Northern New Jersey mall project.Under the terms of a letter of intent entered into by the beleaguered retail REIT, Colony would arrange for construction financing for the $2 billion project and make a "significant equity infusion" into the joint venture, Mills reported. Kan Am has been the REIT's partner on the project since 1997, and while the recapitalized partnership will continue to have the same obligations to the New Jersey Sports and Exposition Authority, The Mills will not have any post-closing financial obligations, according to the REIT. As consideration for the transaction, the REIT would issue at closing either 4.5 million shares of its common stock or 4.5 million units of The Mills LP, redeemable for the same number of shares of The Mills common stock. The REIT can be found online at http://www.themills.com.

Ginnie Mae has announced that Section 538 guaranteed loans under the U.S. Department of Agriculture's Rural Development Multifamily Housing Program are now eligible as collateral for Ginnie's multifamily securities.Section 538 loans are used to "revitalize" Section 515 multifamily loans, which are aimed at providing housing for persons in designated rural areas who have low or moderate incomes, Ginnie Mae said. "This product will complement Ginnie Mae's existing multifamily securitization products and will enhance the availability of multifamily housing for low- and moderate-income families in rural areas," the agency said. Ginnie Mae can be found online at http://www.ginniemae.gov.

A commercial real estate index maintained by the National Association of Realtors is indicating that the improvement in the CRE market will continue into next year, according to the NAR.The Commercial Leading Indicator for Brokerage Activity stood at 119.4 in the second quarter, up 0.4% from 118.9 in the first quarter and 2.5% from 116.5 a year earlier, the association reported. It was the fifth consecutive quarter of growth in the index. "Our commercial leading indicator has risen in 11 out of the last 12 quarters, meaning the recovery in commercial real estate will be sustained well into 2007," said David Lereah, the NAR's chief economist. "However, we are seeing a deceleration in the rate of growth -- apparently in response to higher oil prices and interest rates -- so the expansion in net absorption and commercial construction should continue, but at a slower pace." The association can be found online at http://www.realtor.org.

Consumers with mortgages have an average credit score 55 points higher than that of consumers without a mortgage, according to a study by Experian Consumer Direct, Irvine, Calif.The provider of online credit reports to consumers said the study also indicates that consumers with second mortgages have an average credit score 81 points higher than that of consumers without a mortgage. "Consumers with mortgages are doing a great job managing their credit, and those with second mortgages are doing even better," said Ty Taylor, president of Experian Consumer Direct. "Although consumers with mortgages have on average about five times more debt than those without, their average credit score is 713 -- compared to 658 for consumers without a mortgage." Experian can be found online at http://www.experian.com, and the national and statewide results of the study can be found at http://www.nationalscoreindex.com.

Morgan Stanley Real Estate is acquiring Glenborough Realty Trust, a San Mateo, Calif.-based office real estate investment trust, in a transaction valued at about $1.9 billion.The acquisition price includes $26 per Glenborough common share in cash, the repayment or assumption of Glenborough's existing debt, and the redemption of its convertible preferred stock, Morgan Stanley Real Estate reported. The price per share represents a 15.2% premium over the Glenborough stock's 30-day average closing price through Aug. 18, according to Morgan Stanley. The Glenborough portfolio consists of 45 properties encompassing approximately 8 million square feet. Michael Franco, a managing director at Morgan Stanley Real Estate, noted that the REIT's "high-quality office properties are located in some of the country's most desirable and supply-constrained office markets, such as Washington, D.C., and Northern and Southern California." The merger is expected to be completed during the fourth quarter.