Secondary Market

Holliday Fenoglio Fowler, L.P. (HFF), a provider of commercial real estate and capital markets services, announced this week that Christopher Simon is the company's new managing director of its debt placement group. A 13-year veteran of commercial real estate, Simon's new role will focus on originating debt, equity, and structured finance transactions throughout the western United States.

Fitch Ratings has upgraded the individual and preferred stock ratings of Bank of America. But the agency says the upgrades are tempered by the bank's high level of nonperforming loans and the likelihood of large volumes of mortgage repurchase requests from the GSEs and other secondary market investors, largely because of the loans the bank inherited from its Countrywide acquisition. Fitch also expressed concern about BofA's exposure to home equity loans, especially those with loan-to-value ratios above 100 percent.

The Arizona Superior Court issued a ruling this month that allows San Diego-based receivership and loan recovery specialist Trigild to sell seven Arizona apartment complexes to Standard Portfolio for $123 million. The 2,759-unit portfolio was abandoned last year by the investment firm Bethany Group and placed into receivership in March 2009. The court's ruling allows the properties to be sold without requiring the lender to foreclose prior to the sale.

Members of the U.S. House of Representatives are calling on President Obama and the GSEs' regulator to ""use all of [their] powers to recover money"" from companies that shifted losses on to Fannie Mae and Freddie Mac. They say legal action should be used to recoup funds from the underwriters of faulty mortgages and the issuers of underwater securities that have saddled Fannie and Freddie with hundreds of billions of dollars in bad loans and cost taxpayers almost $150 billion to date.

About 50 percent of the loans held by Fannie Mae and Freddie Mac come from the nation's four largest banks - Bank of America, JPMorgan Chase, Wells Fargo, and Citi. Lately, the GSEs have become more aggressive in forcing originators to buy back bad loans. Based on Fannie and Freddie's current ""distressed"" numbers (a combined $354 billion in delinquent mortgages and REOs), Fitch Ratings estimates that the big four could be on the hook to repurchase as much as $180 billion in nonperforming assets.

Real estate prices on U.S. commercial properties dropped 4 percent in June, according to data released by Moody's Investors Service Thursday. The decline followed two months of price increases, illustrating that ""performance remains choppy"" in the commercial real estate sector, the New York-based ratings agency said. Moody's index is now 41.4 percent below the peak that was recorded in October 2007, but 4.2 percent above the recession low that occurred in October 2009.

SMART Servicing, LLC, an affiliate of Steel Mountain Capital Management, recently announced the availability of its new privately owned software, ""SMART""--Servicing Management Asset Recovery & Tracking. The system provides residential mortgage professionals with relevant loan-level information to control loss severity, as well as asset-level transparency outside the traditional servicing system formats, the company says.

A federal judge is refusing to sanction an agreement between Citigroup and the Securities and Exchange Commission (SEC) to settle charges that the company misled investors about its exposure to subprime home loans, even as the subprime market began to unravel. Citi agreed to pay a $75 million penalty to settle the charges, but at a hearing this week, a U.S. district judge asked how the parties could expect her to ""find this reasonable and fair.""

Will Fannie Mae and Freddie Mac still be here in three years? Or will they be replaced by a new federal mortgage agency? Or will the government begin a grand exodus from the housing market and leave the conveyance of the American Dream to the private sector? These were the questions addressed Tuesday at the administration's housing finance conference in Washington - a discussion that the Treasury says will help shape its proposal for the future of the housing finance system, including the structure of the nation's two largest mortgage companies.

Transaction prices of commercial properties sold by major institutional investors surged over 17 percent in the second quarter of 2010, according to an index developed by the Center for Real Estate at the Massachusetts Institute of Technology (MIT). The researchers say the price gauge's bounce is near a record high, but they caution that the data is laden with mixed signals, particularly since transaction volume was down for the second month in a row and remains at a very low level by historical standards.