Servicing

Three classes of mortgage pass-through certificates issued by Banc of America Alternative Loan Trust series ALT 2006-6 have been downgraded by Fitch Ratings.The downgrades were as follows: class B3, from BBB to BB; class B4, from BB to B; and class B5, from B to C/DR5. Fitch also affirmed the ratings on 34 classes from the transaction. The downgrades were based on a deterioration in the relationship between credit enhancement and loss expectations, Fitch said.

Six classes from Ownit Mortgage Loan Trust series 2005-2 have been downgraded by Fitch Ratings as a result of changes in the rating agency's subprime loss forecasting assumptions.The downgrades were as follows: class M-6, from A-plus to BBB; class B-1, from A to BB-plus; class B-2, from A-minus to BB-minus; class B-3, from BBB-plus to B; class B-4, from BBB-plus to CC/DR2; and class B-5, from BBB to CC/DR3. Fitch also affirmed the ratings on six other classes in the deal. The revised assumptions in Fitch's subprime loss model "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 said.

Meanwhile, three classes from Bear Stearns Asset Backed Securities 2005-AQ1 mortgage pass-through certificates were downgraded by Fitch Ratings as a result of changes in the rating agency's subprime loss forecasting assumptions.The downgrades were as follows: class M-6, from BBB-minus to BB-plus; class M-7, from BB-plus to BB-minus; and class M-8, from BB to B-plus. Fitch also affirmed the ratings on six other classes in the deal. The revised assumptions in Fitch's subprime loss model "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 said.

Eight classes from two issues of Bear Stearns Asset Backed Securities Inc. mortgage-backed securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 2004-2, class M-2, from A to BBB-plus, class M-3, from BBB to BB, and class B, from BBB-minus to B; and series 2005-2, class M-3, from A-minus to BBB-plus, class M-4, from BBB-plus to BBB-minus, class M-5, from BBB to BBB-minus, class M-6, from BBB-minus to BB, and class M-7, from BB to C/DR4. Fitch also affirmed the ratings on five other classes in the two deals. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations. The securitizations are backed by fixed- and adjustable-rate, first- and second-lien mortgage loans. The rating agency can be found online at http://www.fitchratings.com.

Fannie Mae has announced the availability of mortgage relief for victims of recent California wildfires and the donation of $150,000 in grants to American Red Cross chapters in Southern California.The mortgage relief is available under Fannie's single-family servicing guidelines on disaster relief, which advise lenders to make judgments on a case-by-case basis about suspending or reducing mortgage payments for up to four months or offering loan repayment plans that may extend up to 18 months. The Red Cross grants were made to chapters in Los Angeles, San Diego, and San Bernardino counties.

Fannie Mae issued $58.4 billion in mortgage-backed securities in September, the company has reported, marking the sixth consecutive month its MBS issuance has exceeded $50 billion.MBS issuance by Fannie and Freddie has been increasing this year while private-label MBS issuance has declined dramatically. But like all mortgage companies, Fannie is experiencing rising delinquencies. The serious delinquency rate on Fannie single-family loans with private mortgage insurance or other credit enhancements hit 2% in September, up 26 basis points from that of a year earlier. Overall, Fannie's single-family mortgage portfolio has a 0.71% serious delinquency rate (90 days or more past due). Fannie's monthly report also shows that its investment portfolio shank by $7.2 billion to $267.4 billion in September and its purchases totaled only $202 million, compared with $2.8 billion in August. Fannie Mae can be found online at http://www.fanniemae.com.

Capstead Mortgage Corp., Dallas, has reported a net loss of $3.15 million ($0.43 per share) for the third quarter, compared with a net loss of $1.49 million ($0.35 per share) a year earlier.After considering the payment of preferred share dividends, the numbers resulted in a net loss of $8.21 million ($0.43 per share) in the third quarter and a loss of $6.56 million ($0.35 per share) a year earlier, Capstead reported. The company attributed the recent loss to the credit crunch that led to falling asset values and distressed sales of nonagency residential mortgage securities. "These distressed sales placed downward pressure on market values of all residential mortgage securities, including agency-issued and -guaranteed securities such as those that comprise over 99% of Capstead's mortgage securities and similar investments portfolio," the company said. Capstead can be found on the Web at http://www.capstead.com.

Two million households with adjustable-rate subprime mortgages could end up in foreclosure by the end of 2009 and lose $71 billion of their housing wealth, according to a Joint Economic Committee report that breaks down the impact of foreclosures on each state."The Bush administration needs to take off its ideological handcuffs and act quickly to save financially strapped families from drowning in a tidal wave of subprime foreclosures," JEC Chairman Charles E. Schumer, D-N.Y., said in releasing the report. The report estimates foreclosure losses by state, including projections that neighboring homeowners will see the value of their homes decline by $32 billion. The congressional report covers subprime foreclosures from the beginning of 2007 to the end of 2009 and assumes that house prices will decline sharply. The Bush administration estimates that foreclosures will not exceed 500,000, Sen. Schumer said, adding, "That is much too low."

Countrywide Financial Corp. on Friday morning posted a stunning $1.2 billion loss in the third quarter -- the largest loss in its history -- but predicted a return to profitability in the fourth quarter and next year.The company also revealed that it moved $12 billion of nonagency loans and securities onto the balance sheet of its bank, into a "held-for-investment" account. In a statement, Countrywide chairman and chief executive Angelo Mozilo blamed the loss on the mortgage market's nonprime liquidity crisis, noting that it was forced to revalue its mortgage holdings downward and pay more to third parties for credit protection. The Calabasas, Calif.-based company said it lost $1 billion by selling mortgage assets at a discount or marking down their value. Its servicing business was a major source of income in the quarter, posting operating earnings of $764 million, a 47% rise from that of a year earlier. But its loan production unit lost $1.3 billion in the third quarter. Countrywide funded $94.6 billion in loans during the quarter, a 19% drop from the level of a year earlier. The company can be found online at http://www.countrywide.com.

Class M-11 of Mortgage Asset Securitization Transactions Asset Back Securities Trust series 2004-HE1 has been downgraded from BBB-minus to BB by Fitch Ratings.Fitch also affirmed the ratings on 12 other classes in the transaction. The downgrade resulted from a deterioration in the relationship between credit enhancement and expected losses, the rating agency said. The collateral for the deal consists primarily of fixed- and adjustable-rate, first- and second-lien subprime mortgage loans.