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Four tranches from Structured Adjustable Rate Mortgage Loan Trust 2005-21 have been downgraded by Moody's Investors Service.The downgrades were as follows: class B3-I, from A2 to A3; class B4-I, from A3 to Baa2; class B5-I, from Baa2 to Ba1; and class B6-I, from Baa3 to B1. The downgrades were based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels, Moody's said. The collateral consists primarily of first-lien, adjustable-rate, alternative-A mortgage loans. Moody's can be found online at http://www.moodys.com.

Eighteen classes of mortgage-backed securities from several issuers have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also placed nine classes on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of over $3 billion. Among the securities affected by the latest downgrades were: 11 classes from four issues of Soundview Home Equity Loan Trust asset-backed certificates; three classes from Fremont Home Loan Trust mortgage pass-through certificates, series 2005-1; two classes from Meritage Mortgage Corp. asset-backed certificates, series 2005-2; one class from UBS MASTR Asset Backed Securities mortgage pass-through certificates, series 2005-NC1; and one class from Terwin Mortgage Trust asset-backed certificates, series 2005-5SL. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness." The rating agency can be found online at http://www.fitchratings.com.

Citing deterioration in the housing and mortgage markets, Franklin Bank Corp., Houston, has announced a decision to increase its allowance for credit losses by approximately $20 million.Franklin said it expects credit costs for its commercial loan portfolio to range from $5.0 million to $7.5 million next year. The company said its total allowance for credit losses will grow from 0.42% to 0.91%, while the reserve for the builder finance portfolio will increase from 0.52% to 1.72% and the overall commercial loan reserve will rise from 0.61% to 1.33%. "Franklin's management believes that this effort to anticipate issues, rather than wait for them, should remove the perceived risk to our institution from both the builder finance and mortgage portfolios," the company said. Franklin Bank can be found on the Web at http://www.bankfranklin.com.

House prices declined 4.9% during the 12-month period from September 2006 to September 2007, according to the Standard & Poor's/Case-Shiller housing price index, which covers 20 metropolitan areas."Most of the metro areas continue to show declining or decelerating returns on both an annual and monthly basis," said Robert Shiller, chief economist at MacroMarkets LLC. Only five of the 20 metro areas -- Atlanta; Charlotte, N.C.; Dallas; Portland, Ore.; and Seattle -- posted positive price increases, but they are all under 5%. Mr. Shiller told reporters that a futures index based on the S&P/C-S HPI 10-city index is predicting that house prices will decline by over 5% next year, and he thinks that is a "reasonable" estimate. "We are in the aftermath of the biggest housing boom in history," which was fueled by unprecedented speculation on residential properties, Mr. Shiller said. He sees a greater-than-50% chance of a recession due to declining housing starts, falling house prices, rising foreclosures, and problems in the financial markets. Further information on the index can be found online at http://www.homeprice.standardandpoors.com.

A study commissioned by the U.S. Conference of Mayors predicts that the "foreclosure crisis" will shave $166 billion off the U.S. economy next year.The analysis, performed by Global Insight for the mayors' association, predicts that homeowners nationally will see the value of their equity drop by $1.2 trillion in 2008. The study also projects that "at least" 1.4 million homes will go into foreclosure next year, representing a market value of $316 billion in property. The study predicts that home prices will fall by 7% nationally in 2008. The mayors say the housing downturn will ripple through the economy, trimming job creation by 524,000 next year.

Sen. Charles E. Schumer, D-N.Y., has urged the regulator of the Federal Home Loan Banks to undertake a special review of the loans that Countrywide Bank has pledged to collateralize $51 billion in advances from the FHLBank of Atlanta.The thrift subsidiary of Countrywide Finance Corp. increased its advance borrowings in the third quarter by $28.2 billion -- up nearly 80% from those of the previous quarter. In a letter to the Federal Housing Finance Board, Sen. Schumer urged the regulator to "probe" the underlying risk of Countrywide's collateral, which includes payment-option mortgages. The senator said in a CNBC-TV interview that he has concerns about the Atlanta FHLBank's ability to assess the risk of Countrywide's collateral. "At a time when Countrywide's mortgage portfolio is deteriorating, the Federal Home Loan Bank's exposure to Countrywide poses an unreasonable risk," the Senate Banking Committee member said. A Finance Board spokesman said the agency would "respond to Sen. Schumer," but declined to comment further.

Four classes from two Long Beach Mortgage Loan Trust transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 2003-2, class M-4, from BBB-minus to B, and class M-5, from BB-plus to CCC/DR1; and series 2004-2, class M-7, from BBB-minus to BB-minus, and class B, from BB to CCC/DR1. Fitch also placed class M-3 of series 2003-2 and class M-6 of series 2004-2 on Rating Watch Negative and affirmed the ratings on eight other classes in the two deals. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and loss expectations. The collateral in the deals consists of subprime loans secured by first- and second-lien mortgages or deeds of trust.

Five classes from several issues of Residential Asset Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2003-KS3 total group 1 & 2, class M-1, from AA-plus to A-plus (and remains on Rating Watch Negative), and class M-2, from A to BBB-minus (and placed on Rating Watch Negative); series 2004-KS3 total 2-3, class M-II-3, from BBB to BB (and placed on Rating Watch Negative); series 2004-KS8 group 2, class M-II-3, from BBB to BB; and series 2004-KS11, class B, from BB-plus to B. Fitch also placed class M-II-2 of series 2004-KS3 total 2-3, class M-II-2 of series 2004-KS8 group 2, and class M-6 of series 2004-KS11 on Rating Watch Negative and affirmed the ratings on 17 other classes in RASC deals. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and loss expectations. The collateral in the deals consists of first- and second-lien subprime mortgage loans.

Fifteen U.S. collateralized debt obligations backed in whole or in part by trust preferred securities issued by mortgage lenders, real estate investment trusts, and homebuilders have been placed on Rating Watch Negative by Derivative Fitch.The issuance amount of the 120 affected tranches totals $5.4 billion. The rating agency attributed the downgrades to "continued credit deterioration" in underlying collateral. The 15 CDOs were issued by Attentus, Kodiak, Taberna Preferred Funding, and Trapeza. Derivative Fitch Inc., a subsidiary of Fitch Ratings Ltd., can be found on the Web at http://www.derivativefitch.com.

Thirty-three classes of mortgage-backed securities have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also affirmed the ratings on classes with outstanding balances of over $4 billion. Among the securities affected by the latest downgrades were: 26 classes from four issues of Long Beach mortgage pass-through certificates; four classes from one issue of Residential Asset Securities Corp. mortgage pass-throughs; two classes from one Residential Asset Mortgage Product transaction; and one class from a Fieldstone Mortgage Investment Trust deal. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness."