Magazine article American Banker

Criimi Shift Nets Downgrade

Magazine article American Banker

Criimi Shift Nets Downgrade

Article excerpt

Fitch Inc. has downgraded Criimi Mae Inc.'s commercial mortgage servicer ratings, in part because of its plan to reinvent itself as an originator.

The company plans by yearend to start originating mortgages, which it would hold on its balance sheet and finance by selling bonds backed by senior interests in the loans. Criimi, which emerged from bankruptcy protection in 2001, currently just holds commercial mortgage-backed securities and acts as a special servicer for such deals.

Stephanie Petosa, a senior director in Fitch's commercial mortgage-backed securities group, said in an interview that the transition, along with new management and heavy staff turnover, caused the downgrades.

Ms. Petosa sounded generally positive about Criimi but ambivalent about its plans. The rating agency does not necessarily "think it's a wrong direction," she said. "We think it's a new direction."

"It remains to be seen" how the Rockville, Md., company's "newness" affects its Criimi Mae Services LP arm, Ms. Petosa said. "We like the team they've put in place, but they have essentially created a new company."

Fitch announced Wednesday that it had cut Criimi's special servicer rating to "CSS3-plus" from "CSS2-plus" and its primary servicer rating to CPS2-minus from CPS2. The agency affirmed Criimi's master servicer rating of CMS3.

Fitch's servicer ratings range from 1-plus (the best) to 4-minus (the worst). A servicer usually needs at least a 3 to take on new work. Most "untested" servicers start off around a 3, Ms. Petosa said.

A spokesman said Criimi understood why Fitch "decided to move the needle back to neutral."

"The company is eager for Fitch to do its next rating after it's had a chance to observe the changes," he said. He added that the downgrades would not affect its business. (Criimi does no master or primary servicing.)

Ms. …

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