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option available to the servicer or not," Barclays said. "It is also unclear what the courts will decide and if the decision could be applicable across the board, given the wide variation in the language of the servicing agreements . . . . We will continue to follow this case to look for more guidance from the courts." IN THE NEWS AIG Forms New Business Unit for Mortgage Investments New York-based American International Group (AIG) announced the creation of a new business unit to expand its mortgage investments. The new company, named Connective Mortgage Advisory Company, "draws upon AIG's investment expertise and the experience of its mortgage insurance subsidiary, United Guaranty Corporation, to identify and buy residential whole loan mortgages as investments," AIG said in a statement announcing the launch. AIG will manage the loan servicing component for all loans purchased by Connective as long-term investments. William Dooley, EVP of investments and financial services for AIG, commented, "Direct investment in residential mortgage loans offers attractive investment returns and enables a proactive approach to managing mortgage risk." The new investment venture stems from AIG's experience with United Guaranty, its mortgage insurance subsidiary. United Guaranty "is contributing deep knowledge of the residential mortgage landscape to the Connective project," AIG said. "With the support of AIG, United Guaranty became the mortgage insurance market-share leader with risk-based pricing products," said Donna DeMaio, United KNOW THIS Barclays expects New York's distressed housing inventory to peak in 2014 at 10.28% of all mortgages in the state. 100 Guaranty's CEO. "United Guaranty's understanding of residential mortgage markets, combined with AIG's investment expertise, creates unique, new investment opportunities for AIG." Connective will establish correspondent relationships with lenders, underwrite loans, and provide support throughout the loan purchase process. There are no plans for Connective to conduct any direct lending or securitization, AIG said. CMBS Delinquencies Down for 9th Straight Month Delinquencies on loans held in U.S. commercial mortgage-backed securities (CMBS) spiraled down for the ninth straight month in February, New York-based Fitch Ratings reported. Two large debt restructurings helped bring down the CMBS delinquency rate, which fell 30 basis points (bps) from 7.91 percent in January to 7.61 percent in February, according to the rating agency's index. The dollar balance of delinquent loans sank below the $30 billion mark, a first since February 2010, Fitch stated. Two highprofile modifications—the $195.1 million Babcock & Brown FX 3 portfolio and the $190 million One Congress Street loan— have been modified and were removed from the agency's index. "With many loans over $100 million still in the index, steep month-over-month declines in CMBS delinquencies are likely to continue as larger loans get resolved," said Mary MacNeill, managing director at Fitch. In addition, February was the largest month for new CMBS issuances in more than five years, which also helped bring down the delinquency rate. Resolutions, which reached $2 billion, outpaced the $1.1 billion new CMBS loans added to the mix in February. With the exception of industrial, all commercial sectors saw a month-overmonth drop in delinquencies. The multifamily delinquency rate fell 59 bps to 9.14 percent, while the hotel delinquency rate decreased from 8.76 percent to 8.32 percent. The office sector's delinquencies dropped from 8.33 percent to 8.18 percent, and the delinquency rate for the retail sector declined 8 bps to 7.35 percent. On the other hand, delinquencies among CMBS loans collateralized by industrial properties increased to 9.61 percent, up 92 bps from 8.69 percent in January. North Carolina rank: 30 90+ Day Delinquency Rate Foreclosure Rate February 2013 2.8% Unemployment Rate 2.3% 9.4% year ago 3.0% 3.3% 9.5% year-over-year change -6.3% -28.9% -1.1% Top County 90+ Day Delinquency Rate BerTie CouNTy Foreclosure Rate February 2013 4.0% 4.7% year ago 6.2% 4.8% year-over-year change -35.4% -2.2% Top Core-Based Statistical Area LumBerToN, NC 90+ Day Delinquency Rate Foreclosure Rate February 2013 4.9% 3.5% year ago 5.7% 4.7% year-over-year change -12.8% -24.5% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the February 2013 foreclosure rate. All figures are rounded to the nearest decimal. The unemployment rate reflects preliminary February 2013 figures released by the Bureau of Labor Statistics. All other data courtesy of LPS Applied Analytics. STAT INSIGHT 144 Average days to sell REO homes in North Carolina in Q4 2012. Source: RealtyTrac FROM THE BENCH Hidden Liens Exposed: Uncovering the Controversy Behind North Carolina's New Law New legislation has been enacted in North Carolina that brings substantial change to the state's mechanic and materialman lien law. The changes took effect April 1 and are designed to address "hidden lien" challenges.

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