Servicing

Moody's Investors Service has downgraded 21 classes of mortgage-backed securities from five transactions issued by RAMP in 2004. The downgrades were spurred by credit enhancement levels that may be low given the projected losses on the underlying pools, the rating agency said.

Four classes of notes and one class of preference shares issued by McKinley Funding III Ltd., a collateralized debt obligation backed partly by residential mortgage-backed securities, have been downgraded by Moody's Investors Service.The downgrades were as follows: class A-2, from Aaa to A2 (and left on review for possible further downgrade); class B-l, from Aa2 to Caa3 (and left on review for possible further downgrade); class B-2, from Aa3 to Ca; class C, from Baa2 to Ca; and preference shares, from Ba1 to Ca. Moody's said the negative rating actions reflect "severe deterioration" in the credit quality of the underlying portfolio, as well as a Dec. 10 event of default caused by the failure of the class A overcollateralization ratio to equal or exceed 100%, as required under the indenture.

Five classes of mortgage-backed securities issued by RASC trusts have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2003-KS3, class M-1, from Aa2 to Baa3, and class M-2, from A2 to Ba2; and series 2003-KS6, class M-1, from Aa2 to Baa2, class M-2, from Baa1 to B1, and class M-3, from Baa2 to B2. "The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to the expected loss," the rating agency said.

Six classes of mortgage-backed securities from RAMP series 2003-RS9 have been downgraded by Moody's Investors Service.The downgrades were as follows: class M-I-3, from Baa1 to Baa3; class M-II-1, from Aa2 to A2; class M-II-2, from A2 to Baa3; class M-II-3, from A3 to B1; class M-II-4, from Baa1 to Caa1; and class M-II-5, from Baa2 to C. "The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to the expected loss," Moody's said. The underlying assets consist of fixed-rate mortgage loans in group I and adjustable-rate mortgage loans in group II.

Ten classes of mortgage-backed securities issued by RAMP have been downgraded by Moody's Investors Service.The affected transactions were the series 2004-KR1 and series 2004-KR2 trusts. The downgrades were driven by credit enhancement levels that may be low given the projected losses on the underlying pools, Moody's said. The rating agency can be found online at http://www.moodys.com.

Cascade Bancorp, Bend, Ore., has announced that it expects to record a real-estate-related pretax provision for credit losses of approximately $7.5 million and net chargeoffs of approximately $3.8 million for the fourth quarter.Cascade estimated that its net income will total approximately $5.4 million ($0.19 per share) for the quarter. "The softness in our real estate markets has worsened in the past quarter, putting increased pressure on cash flows of developers and builders of new homes and subdivisions," said Patricia L. Moss, Cascade's chief executive officer. The company's wholly owned subsidiary, Bank of the Cascades, can be found on the Web at http://www.botc.com.

Franklin Credit Management Corp., a specialist in servicing and resolving residential mortgage loans, has entered into restructuring agreements with its lead lending bank, according to the Jersey City, N.J.-based company.Franklin Credit's indebtedness to The Huntington National Bank was reduced by approximately $300 million, and Franklin paid the bank a $12 million restructuring fee. In addition, approximately $1.5 billion in debt to the bank (including about $491 million owed by Tribeca Lending Corp., an origination subsidiary of Franklin Credit) was restructured into six term loans with modified terms and a maturity date of May 15, 2009, Franklin reported. The forbearance agreements also contain certain restrictions on Franklin Credit's activities. The company also reported that it has been notified by the NASDAQ Stock Market that its common stock has failed to maintain the $5 million minimum market value required for listing. Failure to restore compliance by April 1 will result in a delisting notification. Franklin Credit can be found online at http://www.franklincredit.com.

Irwin Financial Corp., Columbus, Ind., has announced that it expects to report a mortgage-related consolidated loss (including discontinued operations) of $15-20 million in the fourth quarter.The company said it will take approximately $5 million in restructuring charges in the fourth quarter and expects to take less than $2 million in the first quarter. "In our home equity segment, we are being negatively affected by the noncore portfolio we transferred from 'held-for-sale' when the secondary market collapsed in the first quarter of 2007," said Will Miller, Irwin's chairman and chief executive officer. "These loans, which were originated for sale and did not meet our core portfolio credit guidelines, are adding to our delinquencies and required provision at a rate that is disproportionate to the portfolio as a whole. In addition, we are seeing greater-than-expected rate of delinquencies and losses on loans where loan-to-values at origination approached 100%." Irwin can be found online at http://www.irwinfinancial.com.

State Street Corp., Boston, has taken a $279 million net charge after taxes for the fourth quarter to establish a reserve designed to address costs related to active fixed-income strategies exposed to subprime mortgage markets.State Street has also named James S. Phalen, executive vice president and head of international operations for investment servicing and investment research, as the new interim chief executive officer of State Street Global Advisors. William W. Hunt, the previous SSGA CEO, has resigned. SSGA, State Street's investment management arm, manages its fixed-income strategies.

The Mortgage Bankers Association has changed course and is now backing stand-alone legislation that would allow Fannie Mae and Freddie Mae to purchase jumbo loans of up to $625,000 nationwide on a temporary basis.In a letter to the GSEs' regulator, the MBA contends that liquidity problems in the jumbo market have led to higher interest rates on loans above the conforming loans limit ($417,000) and fewer financing options for borrowers. "The increase should be in effect for no less than 12 months, and up to 24 months if market conditions warrant," the MBA says in a letter to James Lockhart, director of the Office of Federal Housing Enterprise Oversight. The MBA previously opposed a temporary hike in the conforming lending limit unless it was part of a comprehensive bill to strengthen the regulation and supervision of the government-sponsored enterprises. The association can be found online at http://www.mortgagebankers.org.