Fitch Ratings downgrade watch viewed as warning. (Commercial).

IN A JUNE 4 STATEMENT, JAMES M. MURPHY, chairman of the Mortgage Bankers Association of America (MBA), said: "The Fitch Ratings' announcement yesterday to issue a downgrade watch on $2.46 billion in real estate securities while the company reviews insurance coverage pertaining to terrorism insurance is another example of the cascading effect of Senate inaction to pass a federal terrorism reinsurance backstop. As Congress returns ... all eyes will be on the Senate to pass terrorism insurance legislation before the U.S. economy sags under the weight of further announcements such as this.

"The Senate should not ignore the warning signs that the real estate finance community has been talking about since last fall and are beginning to come to fruition when you consider that Moody's [Investors Service] had a similar announcement ... to put $7 billion on a downgrade watch.

"MBA hopes the Senate will pass legislation as they consider these recent rating agency announcements, the slowdown in commercial development due to restricted capital, as well as the Joint Economic Committee's report, issued in May, that said another catastrophic event would be even more destructive to the U.S. economy," Murphy stated. "When you consider intelligence agency reports of possible terrorist attacks in the future, the time to act is now before it is too late."