Servicing

Arguing that Congress needs to do something about the "foreclosure crisis," Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., says he wants to attach a Federal Housing Administration reform bill and an increase in the GSE loan limit to the economic stimulus package Congress and the White House are working on. Sen. Dodd said he will be meeting with House Financial Services Committee Chairman Barney Frank, D-Mass., to discuss how the House and Senate FHA bills can be reconciled quickly and attached to the stimulus package. "I want to send a bill to the president as soon as possible," Sen. Dodd told reporters. The Connecticut senator also said he supports a temporary increase in the loan limits for Fannie Mae and Freddie Mac so the two government-sponsored enterprises can bring liquidity to the jumbo market. But he did not sound optimistic that that would be possible. The chairman also served notice that he has "concerns" about the House-passed GSE regulatory reform bill and that some changes are needed to get the bill through his committee. "I want a strong regulator," he said. "But I am not going to gut the GSEs. It is not going to happen on my watch."

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is working on legislation that would create a new federal program to purchase "distressed" mortgages from lenders at a discount and provide a new 30-year fixed-rate mortgage to homeowners. Those mortgages could be insured by the Federal Housing Administration or purchased by Fannie Mae or Freddie Mac. The proposed Federal Homeownership Preservation Corp. is modeled after a Depression-era program that rescued 1 million homeowners from foreclosure. "It would allow us to deal with this foreclosure matter in a creative way -- one that has been tried before and, I think, worked well," Sen. Dodd told reporters. The chairman said he plans to hold extensive hearings soon on how to reduce foreclosures and stimulate the economy.

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is working on legislation that would create a new federal program to purchase "distressed" mortgages from lenders at a discount and provide a new 30-year fixed-rate mortgage to homeowners. Those mortgages could be insured by the Federal Housing Administration or purchased by Fannie Mae or Freddie Mac. The proposed Federal Homeownership Preservation Corp. is modeled after a Depression-era program that rescued 1 million homeowners from foreclosure. "It would allow us to deal with this foreclosure matter in a creative way -- one that has been tried before and, I think, worked well," Sen. Dodd told reporters. The chairman said he plans to hold extensive hearings soon on how to reduce foreclosures and stimulate the economy.

Class B-5 of SASCO 2002-4H pass-through certificates has been placed on Rating Watch Negative by Fitch Ratings. Fitch also affirmed the ratings on five other classes in the deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations. The collateral consists of conventional 30-year fixed-rate mortgage loans.

Twelve classes from three issues of SARM mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also placed two classes on Rating Watch Negative and affirmed the ratings on five classes from the securitizations. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

Twenty-six classes of pass-through certificates from six First Horizon mortgage transactions have been downgraded by Fitch Ratings. Fitch also placed four classes on Rating Watch Negative, removed two classes from Rating Watch Negative, and affirmed the ratings on 23 classes from eight First Horizon deals. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and loss expectations. The collateral generally consists of fixed-rate, first-lien prime mortgage loans, with some interest-only loans to alternative-A borrowers.

Twenty-nine classes of mortgage pass-through certificates from eight Banc of America Alternative Loan Trust transactions have been downgraded by Fitch Ratings. Fitch also placed two classes on Rating Watch Negative and affirmed the ratings on over 100 classes from the BoA deals. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral consists of fixed-rate, first-lien mortgage loans.

Forty-three classes of pass-through certificates from seven LMT mortgage securitizations have been downgraded by Fitch Ratings. Fitch also placed two classes on Rating Watch Negative, removed two classes from Rating Watch Negative, and affirmed the ratings on 10 LMT classes. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and loss expectations. Fitch can be found on the Web at http://www.fitchratings.com.

DBRS, a Toronto-based rating agency, has downgraded 218 classes from 51 residential mortgage-backed securities transactions. The securities, backed primarily by first-lien collateral, were downgraded as a result of a "significant increase in serious delinquencies relative to the available credit enhancement." As a result, excess spread is not expected to be sufficient to cover anticipated losses, the rating agency said.

Downey Financial Corp., a Newport Beach, Calif.-based savings and loan, has reported a mortgage-related net loss of $56.6 million ($2.03 per share) for 2007, compared with net income of $199.7 million ($7.16 per share) in 2006. Downey said a key reason for the poor results was a $283.5 million increase in its provision for credit losses stemming from single-family loan delinquencies and foreclosure-related losses. The thrift also cited a $94.8 million decline in net interest income and a $23.3 million decline in net gains on the sale of loans and mortgage-backed securities, among other things, as contributors to the loss. For the fourth quarter, the company reported a net loss of $108.8 million ($3.90 per share), compared with net income of $52.1 million ($1.87 per share) a year earlier. Downey can be found online at http://www.downeysavings.com.