Servicing

Moody's Investors Service has downgraded 64 tranches from 12 deals backed by Impac collateral in 2006 and late 2005 and placed 34 tranches under review for possible downgrade.The negative rating actions were based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels. The collateral consists chiefly of first-lien, fixed- and adjustable-rate alternative-A mortgage loans. The 12 transactions were issued by Impac Secured Assets Corp., Impac CMB Trust, CWABS Asset Backed Certificates Trust, and Bear Stearns Asset Backed Securities I Trust.

The ratings of 86 tranches from 11 mortgage-backed securities deals issued by Morgan Stanley in 2006 and late 2005 have been downgraded by Moody's Investors Service.In addition, Moody's has placed 37 tranches under review for possible downgrade, and four downgraded tranches remain on review for possible downgrade. The negative rating actions were attributed to higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels. The collateral consists primarily of first-lien, fixed- and adjustable-rate alternative-A mortgage loans.

Standard & Poor's Ratings Services has announced a revision of its outlook on IndyMac Bancorp from stable to negative, citing concerns about the company's "exposure to continued deterioration in the housing and mortgage finance markets."S&P also affirmed its BBB-minus/A-3 rating on the company. At the end of the third quarter, nonperforming assets "exceeded what we consider normalized levels, although they remain within tolerable levels for the rating," S&P said. "Increased credit costs, market value losses on mortgage-related securities, and lower gain-on-sale of mortgage loans resulted in a $203 million loss in the most recent quarter and will continue to limit profitability in the near term." S&P said it expects IndyMac's profitability to "remain depressed" over the near term because of higher credit costs and lower gain-on-sale margins. The rating agency can be found online at http://www.standardandpoors.com.

Standard & Poor's Ratings Services has announced a revision of its outlook on Washington Mutual Inc. and its subsidiaries from stable to negative.S&P also affirmed its A-minus/A-2 counterparty credit rating on WaMu. The outlook revision was based on lower earnings from WaMu's core mortgage banking business and "the negative trends in the national housing and mortgage markets that will depress earnings in the next year," said S&P credit analyst Victoria Wagner. WaMu's projections for higher credit provisions through the first quarter of 2008 are "quite sizable and reflect not only the weak housing markets, but the significant increase in subprime-related credit losses, the rise in second-lien home equity loans," the rating agency said. WaMu's other core retail banking businesses are seeing "good and stable performance," and its mortgage banking business has significant geographic diversification and "a significant reduction in subprime mortgage risk," S&P said. The current investigation by the New York attorney general into WaMu's appraisal practices with eAppraiseIT is not a consideration in the outlook revision, S&P said.

Ginnie Mae has announced the issuance of its first Home Equity Conversion Mortgage mortgage-backed security, a $116 million transaction that is the first-ever government-guaranteed MBS collateralized by Federal Housing Administration-insured reverse mortgages.The so-called HMBS offers "the only full-faith-and-credit vehicle and the only standardized structure" for securitizing FHA-insured HECM loans, Ginnie Mae said. HMBS issuers will be able to securitize all HECM loan draws, mortgage insurance premiums, and servicing and guarantee fees and then pass through payments to investors as homeowners pay off the loan. "Currently, reverse mortgage originators generally get a premium on the initial loan draw and are reimbursed by the investor dollar-for-dollar on subsequent draws," said Thomas R. Weakland, acting executive vice president of Ginnie Mae. "The ability to securitize successive draws means the originator can obtain market pricing on the entire loan amount -- not just the initial draw. That's a key value of the HMBS to lenders."

The House is on track to pass a Mortgage Reform and Anti-Predatory Lending bill Thursday, and the lawmakers will likely attach a separate bill that addresses escrow, appraisal, and servicing issues.The House Financial Services Committee approved the predatory-lending bill by a 45-19 vote Nov. 6. The next day the committee approved the servicing reform bill (H.R. 3837), sponsored by Rep. Paul Kanjorski, D-Pa., by voice vote. The Kanjorski bill establishes enforceable national appraisal independence standards with tough penalties for lenders who pressure appraisers to inflate property values. The bill also requires escrow accounts for taxes and insurance on most subprime mortgages and creates standards for force-placed insurance. New York Attorney General Andrew Cuomo endorsed the appraisal reforms at a news briefing arranged by Rep. Kanjorski last week. The New York AG has raised issues about major institutions that have allegedly been pressuring appraisers.

E*Trade Financial -- which on Friday admitted that it has $450 million in "exposure" on its asset-backed securities portfolio -- saw its stock price crumble 55% Monday morning after an analyst at Citigroup said there's a 15% chance the depository could go bankrupt.As of MortgageWire's deadline, E*Trade's shares were trading down $4.71, at $3.89. Its 52-week high is $26. In a recent public filing, the New York-based company said it has set aside $240 million to cover "deterioration" in its home equity portfolio. Its ABS portfolio totals $3 billion. Even though E*Trade could take more hits on the portfolio in the quarters ahead, the company said in a statement that it "expects to remain well capitalized based on regulatory standards." In September, E*Trade closed its residential wholesale division. The company can be found on the Web at http://www.etrade.com.

Twenty-one certificates from nine Residential Asset Securities Corp. Trust transactions issued in 2004 have been placed on review for possible downgrade by Moody's Investors Service.The negative rating actions were attributed to levels of credit enhancement that "may be inadequate" in view of current and projected pipeline losses, Moody's said.

Three tranches from two closed-end, second-lien residential mortgage securitizations issued by Structured Asset Securities Corp. in 2004 have been downgraded by Moody's Investors Services.The downgrades were as follows: SASCO Trust 2004-S2, class M7, from Baa3 to B3 (and placed on review for possible further downgrade); and SASCO Trust 2004-S4, class B1, from Ba1 to Caa3, and class B2, from Ba2 to Ca. In addition, Moody's placed classes M5 and M6 of series 2004-S2, classes M6 and M7 of series 2004-S3, and class M7 of series 2004-S4 under review for possible downgrade. "The downgrades are driven by back-ended losses that have eroded credit support to a point where the subordinate tranches no longer have sufficient enhancement levels to maintain their current ratings in light of the anticipated losses," Moody's said.

Eleven classes of certificates from four deals issued by GSAMP Trust in 2002 and 2004 have been downgraded by Moody's Investors Service.The affected transactions are GSAMP Trust series 2002-HE, 2004-HE1, 2004-HE2, and 2004-SEA2. The downgrades were attributed to an analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses. GSAMP Trust 2002-HE, 2004-HE1, and 2004-HE2 are backed by subprime fixed- and adjustable-rate mortgage loans, while GSAMP Trust 2004-SEA2 is backed by seasoned subprime fixed-rate mortgage loans.