Secondary Market

On Friday, Goldman Sachs and one of its VPs were charged by the Securities and Exchange Commission for defrauding investors by misstating key facts about a collateralized debt obligation (CDO) tied to subprime mortgages. The SEC said as the U.S. housing market was beginning to falter, Goldman Sachs collaborated with hedge fund Paulson & Co. to cherry-pick loan pools for the CDO that the companies were betting would default. Investors are said to have lost more than $1 billion.

The end of the housing correction is looking closer, as the job market finally turns the corner, investors step up home purchases, and the Obama administration revamps its foreclosure mitigation efforts, according to Moody's Investors Service. The credit ratings agency says it has lifted its outlook for home prices, and with the wide-ranging changes to the Home Affordable Modification Program, the foreclosure crisis just might end earlier than anticipated.

In a glimmer of hope for the commercial real estate market, the office sector may be nearing stabilization, according to the First Quarter 2010 National Office Trends Report released Wednesday by Cassidy Turley, a St. Louis-based commercial real estate service provider.

DoubleLine Funds Trust has launched an open-end mutual fund, DoubleLine Total Return Bond Fund, which will invest in mortgage-backed securities (MBS). The company says the fund seeks to exploit pricing dislocations within the mortgage subsectors, and will target long-term investments in both GSE and private-label mortgage bonds.

Political pressure is growing for lenders to cut mortgage principal. Executives from the nation's four largest banks pushed back against that pressure Tuesday, arguing to lawmakers that a large-scale principal forgiveness program could have dire ramifications for the future of housing finance. It's estimated that some 11 million borrowers owe more on the mortgage than their home is worth. JPMorgan Chase projects it would cost $700 billion to $900 billion to bring these underwater borrowers ""even.""

The Mortgage Bankers Association (MBA) announced Monday that it has named Gail Cardwell as SVP of commercial/multifamily -- a position she previously held. Cardwell rejoins MBA from the Manufacture Housing Institute (MHI), where she served as the president, CEO, and principal spokesperson for the organization.

Halo Portfolio Advisors, LLC has contracted to provide home retention services to a hedge fund operating in the distressed mortgage arena. Halo says its services will improve the performance of the fund's portfolio by providing workouts for non-performing loans using loan modifications, short sales services, refinancing, credit repair, and unsecured debt settlement.

In another win for Standard & Poor's and Moody's Corp., U.S. District Judge Jed Rakoff dismissed a lawsuit claiming the companies defrauded investors who relied on their ratings before buying $63 billion of investment-grade mortgage-backed securities. This isn't the first lawsuit investors have filed against the two credit ratings agencies. And it isn't the first one to be dismissed either.

With refinancing in the commercial real estate (CRE) sector hard to come by and delinquencies continuing to rise, special servicers of commercial mortgages are dealing with large influxes of new troubled loans. Primary and master servicers ranked by Standard & Poor's reported that delinquent CRE loans hit a new all-time high at the end of 2009. A separate study by the research firm Delta Associates says that the aggregate value of distressed commercial real estate in the U.S. has now surpassed $187 billion.

Kennedy Wilson, an international real estate investment and services company headquartered in Beverly Hills, California, has agreed to acquire Sachse Real Estate, a commercial brokerage and property management firm also based in Beverly Hills. This combination will expand the retail capabilities of Kennedy Wilson's investments, brokerage, and management services offerings, and it will give Sachse Real Estate's retail operations a larger platform to source deals, provide equity, and invest in transactions.